French mayors say 'no way' to repaying banks

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By Lionel Laurent
PARIS, France, Oct 12 (Reuters) - French towns that say they were tricked into taking out risky loans from rescued lender Dexia are refusing to repay them in full and are asking President Francois Hollande for a bailout.

Franco-Belgian municipal bank Dexia was propped up with billions of euros of public money last October, when it become the first banking victim of Europe's debt crisis after its strategy of using short-term borrowing scheme to finance long-term lending came unstuck.

Those loans included an estimated 13 billion euros of risky structured products that went sour after the 2008 financial crisis, saddling thousands of French towns with crippling interest rates.

Frustrated by what they perceive as government inaction over the mounting repayments, mayors in a handful of the towns are tearing up their contracts rather than pay the state-rescued bank with money raised from tax hikes or spending cuts.

"I was not elected to raise taxes and to have those taxes go directly into banks," said Xavier-Martin Le Chevalier, mayor of the northwestern coastal town of Tregastel. "Directly or indirectly, the state will end up having to pay the bill."

Remember mortgage-backed securities? France does.

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PARIS | Thu Oct 11, 2012 6:22pm BST

Oct 11 (Reuters) - French mortgage lender Credit Foncier is to kicks off a securitisation programme that will see it sell around 1 billion euros ($1.29 billion) in mortgage debt in the coming weeks, the bank's chief told Reuters on Thursday.
The move comes as Europe's banks seek to cut their balance sheets in the face of tougher regulation and a sputtering economy. It could be a sign of confidence for a French market mortgage-backed securities market which has been slow to recover from the 2008 financial crisis.
"We will very soon launch a first securitisation programme of mortgage bonds...We are working on an initial size of around 1 billion euros," Credit Foncier CEO Bruno Deletre said in an interview, adding insurers and other funds had shown interest.

(Reporting by Lionel Laurent and Matthias Blamont)

French central bank secretly propped up buckling lender

(Full story) (exclusive to Reuters)


By Lionel Laurent

PARIS, Oct 4 (Reuters) - French mortgage bank Credit Immobilier de France (CIF) was benefiting from emergency Bank of France funding to keep it afloat months before a high-profile government rescue, banking sources told Reuters.

The news comes ahead of negotiations between France and European Union regulators on the fate of the bank and its 2,500 staff.

It shows how actively the Bank of France was working behind the scenes to prevent a crisis of confidence hitting the banking sector of the euro zone's second-largest economy.

In a controversial move that jarred with campaign rhetoric of a crack-down on excess risk-taking in the financial sector, French President Francois Hollande agreed last month to guarantee the bank's debt after rating downgrades starved it of funding.

Yet according to one source with direct knowledge of the matter, more than 2 billion euros ($2.6 billion) in emergency funds had been lent by then to CIF via the Bank of France, implying the lender had been struggling to raise money.

"When CIF ran into problems earlier this year it was forced to use the (central-bank) system," one source with direct knowledge of the matter told Reuters. "The exact number is unclear but it was more than 2 billion euros."

Trader job cull continues as banks offload brokers

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Oct 1 (Reuters) - French brokerage Cheuvreux is likely to cut hundreds of jobs as part of Credit Agricole's sale of the unit to rival Kepler, according to two sources familiar with the matter, the latest in a wave of job cuts to hit equity trading firms.

Credit Agricole said in July it was in exclusive talks to sell Cheuvreux, which employs about 700 people worldwide, to independent financial services group Kepler Capital Markets.

"We've been given pretty strong signals that around 350 to 380 jobs are to be cut at Cheuvreux," a union source told Reuters. "We've met with Credit Agricole CIB, they are indicating that this will be the scale of cuts that will hit staff."

(Reporting by Lionel Laurent, Christian Plumb and Astrid Wendlandt)

Euro fears keep company purse-holders wary

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By Lionel Laurent

MONACO | Thu Sep 27, 2012 8:28am EDT

(Reuters) - Every 15 days, top executives at Greek food company Vivartia gather to gauge how well-prepared they are in the event that Greece succumbs to its debts and crashes out of the euro zone.

The executive team, conceived around a year ago at a time of mounting public anger over painful austerity measures enforced by Greece's international lenders, examines doomsday scenarios such as a return to a nationwide barter economy, an Internet blackout, a bank run and a freeze on supplies.

They are the kind of events that would send shockwaves throughout the world and Vivartia's executives are not alone in trying to prepare for the worst.


Such contingency planning may sound extreme in the light of recent European Central Bank pledges to roll out extra monetary firepower to help keep the euro intact, but company treasurers and cash managers are showing little sign of relaxing when it comes to the euro's future.

"There is always more you can do," said Vivartia Treasurer Marianna Polykrati, on the sidelines of a conference in Monaco.

Bank bailout may cost President Hollande

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By Lionel Laurent and Leigh Thomas

PARIS (Reuters) - A state lifeline to wind down a small, ailing French mortgage lender is likely to carry a political price for President Francois Hollande as he grapples with rising unemployment and economic slowdown, even though there is no immediate budget hit.

The government promised over the weekend to guarantee Credit Immobilier de France's debt, putting an end to the bank's vain search for a buyer after credit rating downgrades drove it into a funding wall.

Unlike Franco-Belgian bank Dexia, which was also rescued with guarantees in the wake of the eurozone debt crisis, CIF is profitable and can be wound down gradually without requiring an injection of taxpayer money, bankers said Monday.

But the bailout risks giving voters the impression that the Socialist president is going soft on the financial sector after promising during his election campaign to crack down on the industry for perceived excessive risk-taking and lavish bonuses.

The daily Le Monde highlighted the irony with a cartoon showing Hollande rescuing a drowning CIF banker while recalling his campaign mantra that "my adversary is the world of finance ... but I don't like seeing people suffer".

Surprise surprise: biz leaders unhappy with French prez

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By Lionel Laurent

JOUY-EN-JOSAS, France (Reuters) - French business leaders stepped up criticism of the new left-wing government on Friday, lamenting a perceived anti-corporate bias and lack of competitiveness, despite the prime minister's recent efforts to mollify them.

The presidency of Socialist Francois Hollande, who has angered some in the corporate world for adopting what they say are "soak-the-rich" tax policies and anti-business rhetoric, came in for heavy scorn on the last day of the Medef business lobby's annual conference.

As well as introducing a 75 percent tax on millionaires, the Hollande administration is eyeing more taxes on banks and energy companies and has pledged to crack down on risky investment banking.

"We are sick and tired of being told how to behave," Sodexo Chairman Pierre Bellon told Industry Minister Arnaud Montebourg, who was sitting on the same debate panel at the conference.